International Tractors to divest 5 pc stake

The promoters of Rs 1,250 crore-sales, ITL, are set to divest 5% stake in the company for around Rs 175 crore, reports Arun Kumar.

In a bid to create a war-chest for acquiring auto component companies in Europe, the promoters of Rs 1,250 crore-sales International Tractors Ltd (ITL) led by Chairman LD Mittal are set to divest five per cent stake in the company for around Rs 175 crore. ITL manufactures tractors under the Sonalika brand.

Talking to Hindustan times, Mittal said the company also plans to enter the capital market in the next financial year to mop up about Rs 800 crore. “Before that we are making private placement where promoters would divest 5 per cent of their holdings,” he added.

In the last two years, four leading private equity firms have combined equity stakes of 37 per cent in the main company of the Mittal-led Sonalika group. In 2005, Citigroup's venture arm had acquired a 10 per cent stake at an enterprise valuation of Rs 1,100 crore, Subsequently, promoters divested 12 per cent to Yanmar of Japan valuing the company at Rs 1,400 crore. Later, UK-based fund 3i acquired 10 per cent (five per cent from promoters and five per cent through fresh shares at around Rs 170 crore. Last year, Morgan Stanley acquired 5 per cent for Rs 125 crore, showing a steady increase in valuation.

Besides funding the expansion and acquisition, the proposed public issue is also aimed at giving an exit route to the existing private equity players. The company reported a net profit of Rs 160 crore in 2006-07.